CFTC Moves to Restore Pre-2012 CPO Exemptions for RIAs

The Commodity Futures Trading Commission on August 18 published a CFTC notice of proposed rulemaking that would exempt certain SEC-registered investment advisers from commodity pool operator registration for pools limited to sophisticated investors and raise the small-pool capital contributions threshold from $400,000 to $800,000. Comments run for 45 days after Federal Register publication.

Chairman Michael S. Selig framed the move as continued work against duplicative rules. “By continuing to address overly burdensome and duplicative rules for its registrants, the CFTC is delivering on its mandate to promote U.S. market competitiveness,” he said. “This proposal is yet another step to unwind overregulation and cut red tape for American businesses while still preserving market integrity.”

Three concrete changes in the notice

The proposal amends Part 4 of the CFTC’s regulations covering commodity pool operators and commodity trading advisors. It does three main things.

• Adds a CPO registration exemption for SEC-registered investment advisers that operate commodity pools offered only to certain sophisticated investors and that meet listed conditions.
• Adds a related CTA registration exemption for advisers to those exempt pools.
• Raises the total gross capital contributions limit in the existing small-pool exemption to account for inflation since 2003.

The Commission says the package, if adopted, would supersede certain no-action positions from its Market Participants Division. The full text of the Part 4 proposal runs more than 50 pages of background, conditions and cost-benefit discussion under RIN 3038-AF61.

Taken together, the three changes aim at the same friction point: private-fund managers already supervised by the SEC who also trade commodity interests. The notice treats registration overlap as a competitiveness issue, not as a gap in investor-protection tools for retail pools.

How the new RIA exemption would work

Proposed Regulation 4.13(a)(4) would let a Registered Investment Adviser claim an exemption from CPO registration for an “Eligible Pool.” The pool must be privately offered, interests must be exempt from Securities Act registration, and participants must be limited to Eligible Participants.

Natural-person participants would be restricted to those QEPs listed in Regulation 4.7(a)(6)(i) that do not have to meet the Portfolio Requirement. Non-natural-person participants would be limited to QEPs and certain accredited investors under SEC Rule 501. The RIA would also have to file Form PF for the pool if otherwise required to do so.

In short, an Eligible Pool would have to clear every gate below before the RIA could claim the CPO exemption:

• Private offering only, with interests exempt from Securities Act registration.
• Natural-person participants limited to the QEPs in Regulation 4.7(a)(6)(i) that need not meet the Portfolio Requirement.
• Non-natural-person participants limited to QEPs and certain accredited investors under SEC Rule 501.
• Form PF filing for the pool whenever the Advisers Act already requires it.

The structure largely codifies the staff position in no-action letter issued in December 2025 (Letter 25-50), with refinements. That letter already told qualifying RIA-CPOs the Division would not recommend enforcement for failure to register when pools were limited to QEPs and other conditions held. A follow-on letter in February 2026 expanded related delegation relief. Formal rule text would replace reliance on staff letters that can be withdrawn.

A conforming CTA exemption appears in proposed Regulation 4.14(a)(8). The Commission’s stated rationale is that these RIAs already face SEC oversight under the Advisers Act, examinations, disclosures and, where applicable, Form PF systemic-risk reporting. Layering full CFTC Part 4 registration, disclosure and NFA membership on top creates overlap the agency now wants to shrink.

Pool-by-pool compliance remains essential. An adviser could claim the exemption for one Eligible Pool and still need full CPO registration for another vehicle that admits non-QEP or retail participants. The relief is narrow by design.

Small-pool limit doubles after 23 years

Regulation 4.13(a)(2) currently exempts operators of pools with no more than 15 participants and total gross capital contributions not exceeding $400,000 (with certain related-party exclusions). That dollar figure was last raised in 2003, when the CFTC doubled the prior $200,000 level set in 1981.

The proposal would lift the capital contributions threshold to $800,000. Participant count stays at 15. The Commission presents the change as a straightforward inflation adjustment that keeps the original policy intact: regulatory costs of full registration outweigh benefits for truly small family, club or starter pools.

The QEP Portfolio Requirement figures appear for context only. Those were doubled in a separate September 2024 final rule, with compliance required by March 26, 2025. This new proposal does not reopen the QEP definition itself.

Keeping the 15-participant cap while only moving the dollar figure underscores the Commission’s intent. The small-pool path stays reserved for compact vehicles. It is not a back door for larger private funds that should use the RIA-QEP route or remain registered.

The 2012 rescission and the long road back

From 2003 until 2012, former Regulation 4.13(a)(4) gave CPOs an exemption for privately offered pools whose participants met QEP or certain accredited-investor tests. The Commission rescinded that Original QEP Exemption in 2012 after the financial crisis and the joint adoption of Form PF with the SEC. Registration and Form CPO-PQR-style reporting expanded for many private fund managers that also traded commodity interests.

Staff later issued successive no-action positions to ease the resulting dual-registration burden. Letter 25-50 in December 2025 was the broadest recent restoration for RIA-managed QEP pools. The current notice would put a refined version of that relief into the Code of Federal Regulations so market participants no longer depend on temporary staff forbearance.

1. 2003, Original QEP Exemption adopted; small-pool capital limit raised to $400,000.
2. 2012, Original QEP Exemption rescinded; registration and reporting obligations expanded.
3. September 2024, Final rule doubles QEP Portfolio Requirement thresholds to $4 million / $400,000; compliance March 26, 2025. Fund-of-funds monthly account-statement relief also codified.
4. December 19, 2025, Letter 25-50 grants interim no-action relief for qualifying RIA-CPOs of QEP pools.
5. February 2026, Letter 26-06 reissues and expands related delegation relief.
6. August 18, 2026, NPRM proposes to codify RIA-QEP exemption and double small-pool threshold to $800,000.

The pattern is clear. Dollar thresholds that stayed frozen for decades lost purchasing power. Post-crisis registration expansions created parallel SEC and CFTC regimes for the same sophisticated private funds. Successive staff letters patched the worst friction. The proposal would write the patch into permanent rules.

Each step on that timeline answered a different pressure. The 2012 rescission widened the registration net after the crisis. The 2024 QEP threshold update restored some purchasing-power balance for qualified status. The 2025 and 2026 letters then softened dual-registration costs until formal text could catch up. The NPRM is the catch-up step.

Who stands to gain the most relief

SEC-registered advisers that manage private commodity pools for institutions, family offices and high-net-worth QEPs are the primary beneficiaries. They could drop CPO registration, associated NFA membership costs, Part 4 disclosure and recordkeeping overlays, and the need to maintain dual compliance manuals, provided every condition is met on a pool-by-pool basis.

Where conditions hold, the practical unload looks like this:

• CPO registration for the Eligible Pool itself.
• Associated National Futures Association membership costs tied to that registration.
• Part 4 disclosure and recordkeeping overlays that duplicate Advisers Act work.
• Parallel compliance manuals maintained only to satisfy dual regimes.

Operators of genuinely small pools (15 or fewer participants, under $800,000 total capital contributions) would also see the exemption become usable again after inflation had eroded the old $400,000 cap. Family offices, club pools and early-stage commodity vehicles sit in that category.

Investors in those pools would continue to receive whatever protections the SEC Advisers Act and any remaining CFTC anti-fraud rules supply. They would not receive the full Part 4 disclosure package that registered CPOs must deliver. The Commission’s view is that sophisticated Eligible Participants can evaluate those risks without it.

Firms that remain fully registered CPOs or CTAs keep their current obligations. The proposal does not lighten the load for pools offered to retail or non-QEP participants. National Futures Association fees and exams would still apply to registered firms. Some commenters may argue that less Form CPO-PQR-style data reaches the CFTC; the agency counters that Form PF already captures much of the systemic picture for these RIAs and that the two agencies share the data under an existing memorandum of understanding.

By continuing to address overly burdensome and duplicative rules for its registrants, the CFTC is delivering on its mandate to promote U.S. market competitiveness. This proposal is yet another step to unwind overregulation and cut red tape for American businesses while still preserving market integrity.

Chairman Michael S. Selig said that in the August 18 release. The language tracks his earlier public remarks calling for a “minimum effective dose” of regulation, an approach also referenced in joint SEC-CFTC coordination documents this year.

Crypto stays on a separate track

The NPRM does not create new digital-asset rules. It addresses traditional commodity-interest pools and the registration architecture that governs them. Crypto market-structure questions remain under separate consideration.

The CFTC has scheduled its inaugural Investment Advisory Committee meeting for August 20, with a session titled “Crypto’s Regulatory Evolution: From Uncertainty to Clarity.” That discussion sits alongside ongoing congressional work on broader digital-asset legislation. Crypto-focused fund managers therefore continue under the rules currently in force, including whatever CPO or CTA status their activities trigger.

The timing is coincidental rather than coordinated. Still, the same week brought both the Part 4 proposal and same-week White House and CFTC crypto talks. Market participants watching the parallel SEC comment window on novel products will treat the two agencies’ calendars as linked even when the rule texts are not.

Why Permanent Rules Beat Staff Forbearance

Letter 25-50 and Letter 26-06 already gave qualifying RIA-CPOs workable breathing room. Staff no-action is still temporary. A Division can narrow or withdraw it. Counsel must keep monitoring the letters’ status and conditions.

Putting refined relief into Regulation 4.13(a)(4) and Regulation 4.14(a)(8) changes that calculus. Codified text lives in the Code of Federal Regulations until the Commission amends it through notice-and-comment. Firms can build manuals, offering documents and delegation arrangements around stable rule language rather than around forbearance that might shift.

The notice also states that the package would supersede certain Market Participants Division no-action positions. That cleanup matters for dual registrants who have been stitching together letters, Form PF duties and SEC examinations into a single operating picture. One rule text is easier to audit than a stack of staff positions.

What Market Integrity Still Depends On

Chairman Selig’s release ties the proposal to competitiveness and to preserving market integrity at the same time. The integrity claim rests on tools that stay in place when CPO registration drops away for an Eligible Pool.

• SEC Advisers Act oversight, examinations and disclosures for the RIA.
• Form PF systemic-risk reporting where it already applies, shared under the agencies’ memorandum of understanding.
• Remaining CFTC anti-fraud authority over commodity interest activity.
• Full Part 4 and NFA regimes for any pool that still takes retail or non-QEP money.

The Commission’s bet is that Eligible Participants and small-pool investors do not need a second full disclosure stack on top of that framework. Retail-facing commodity pools are outside the bet. They keep the registration, disclosure and membership load they have today.

Comment window and next steps

Comments must reference the proposal title and RIN 3038-AF61. They can be filed through Regulations.gov, by mail, or by hand delivery to the Commission’s Washington offices. The agency encourages electronic submission. A plain-language summary is also available on the regulations.gov docket once published.

If adopted largely as proposed, the RIA-QEP exemption and the $800,000 small-pool threshold would give private-fund managers a clearer, more permanent path out of dual registration for sophisticated commodity pools. That outcome would close a regulatory circle that opened with the 2003 exemption, closed in 2012, and has been reopened through staff letters since. The 45-day clock is now running.